INCOME TAX OFFICER, MUMBAI versus VENKATESH PREMISES COOPERATIVE SOCIETY LTD. on 12 March 2018

214

SUPREME COURT REPORTS

[2018] 3 S.C.R.

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INCOME TAX OFFICER, MUMBAI

v.

VENKATESH PREMISES COOPERATIVE SOCIETY LTD.

B

(Civil Appeal No. 2706 of 2018)

MARCH 12, 2018

[R. F. NARIMAN AND NAVIN SINHA, JJ.]

Income Tax Act, 1961:

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Exemption from income tax – Of certain receipts by Co-operative Societies from its members i.e. non-occupancy charges,transfer charges, common amenity fund charges etc., on the basisof doctrine of mutuality – Stand by Revenue that such receipts areDin the nature of business income, generating profits and surplus,having an element of commerciality and therefore exigible to tax –Held: Doctrine of mutuality is premised on the theory that a personcannot make a profit from himself – The essence of the principlelies in the commonality of the contributors and the participants whoare also beneficiaries – There has to be complete identity betweenEthe contributors and the participants – Any surplus in the commonfund shall not constitute income but will only be an increase in thecommon fund meant to meet sudden eventualities – The receipts inthe present cases have been used for mutual benefit towardsmaintenance of the premises, repairs, infrastructure and provisionFof common amenities and hence will fall within purview of mutuality– Doctrine of Mutuality.

Receipts by Housing Society, to the extent they were beyondthe limits specified in the Government Notification dated 09.08.2001issued u/s. 79-A of Maharashtra Co-operative Societies Act –GExigibility to tax – Held: The Notification is applicable only to co-operative housing societies and not to a premises society whichconsists of non-residential premises – Hence, the receipts in thepresent case fall within purview of doctrine of mutuality andtherefore, not exigible to tax – Maharashtra Co-operative SocietiesAct, 1960 – s. 79-A.H

Dismissing the appeals of Revenue and allowing that of theassessee-Society, the Court HELD : 1.1 The doctrine of mutuality, based on commonlaw principles, is premised on the theory that a person cannotmake a profit from himself. An amount received from oneself,therefore, cannot be regarded as income and taxable. Theessence of the principle of mutuality lies in the commonality ofthe contributors and the participants who are also thebeneficiaries. The contributors to the common fund must beentitled to participate in the surplus and the participators in thesurplus are contributors to the common fund. The law envisagesa complete identity between the contributors and the participantsin this sense. The principle postulates that what is returned iscontributed by a member. Any surplus in the common fund shalltherefore not constitute income but will only be an increase inthe common fund meant to meet sudden eventualities. A commonfeature of mutual organizations in general, can be stated to bethat the participants usually do not have property rights to theirshare in the common fund, nor can they sell their share. Cessationfrom membership would result in the loss of right to participatewithout receiving a financial benefit from the cessation of themembership. [Para 14] [222-E-H; 223-A]

1.2 Section 2(24) of the Income Tax Act defines taxableincome. The income of a co-operative society from business istaxable under Section 2(24)(vii) and will stand excluded from theprinciple of mutuality. [Para 14] [223-D]

1.3 The receipts in the present cases have indisputablybeen used for mutual benefit towards maintenance of the premises,repairs, infrastructure and provision of common amenities. [Para19][225-E-F]

1.4 Non-occupancy charges are levied by the society andis payable by a member who does not himself occupy the premisesbut lets it out to a third person. The charges are again utilisedonly for the common benefit of facilities and amenities to themembers. Contribution to the common amenity fund taken froma member disposing property is similarly utilised for meetingsudden and regular heavy repairs to ensure continuous and proper A

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Ahazard free maintenance of the properties of the society whichultimately enures to the enjoyment, benefit and safety of themembers. These charges are levied on the basis of resolutionspassed by the society and in consonance with its bye-laws. [Para19] [225-C-D]

B1.5 Transfer charges are payable by the outgoing member.If for convenience, part of it is paid by the transferee, it wouldnot partake the nature of profit or commerciality as the amountis appropriated only after the transferee is inducted as a member.In the event of non-admission, the amount is returned. Themoment the transferee is inducted as a member, the principlesCof mutuality apply. [Para 19] [225-B-C]

1.6 Any difference in the contributions payable by oldmembers and fresh inductees cannot fall foul of the law assufficient classification exists. Membership forming a class, theidentity of the individual member not being relevant, inductionDinto membership automatically attracts the doctrine of mutuality.If a Society has surplus FSI available, it is entitled to utilise thesame by making fresh construction in accordance with law.Naturally such additional construction would entail extra chargestowards maintenance, infrastructure, common facilities andEamenities. If the society first inducts new members who arerequired to contribute to the common fund for availing commonfacilities, and then grants only occupancy rights to them by drawof lots, the ownership remaining with the society, the receiptscannot be bifurcated into two segments of receipt and costs, soas to hold the former to be outside the purview of mutualityFclassifying it as income of the society with commerciality. [Para20] [225-F-H; 226-A]

Commissioner of Income Tax, Bihar v. M/s. BankipurClub Ltd., (1997) 226 ITR 97 (SC) : (1997) 5 SCC394 : [1997] 1 Suppl. SCR 263 ; Bangalore Club v.GCommissioner of Income Tax and Another (2013) 350ITR 509 (SC) : (2013) 5 SCC 509 : [2013] 1 SCR267; Chelmsford Club v. Commissioner of Income Tax,(2000) 3 SCC 214 – relied on.

Commissioner of Income Tax, Madras v. KumbakonamMutual Benefit Fund Ltd., AIR 1965 SC 96 : [1964] 8SCR 204 – distinguished.

A

Commissioner of Income Tax-21 v. Jai HindCo-operative House Construction Society, (2012) 349ITR 541 (Bom) ; Commissioner of Income Tax, Mumbaiv. D.P. Sandhu Bros. Chembur (P) Ltd., (2005) 273 ITR1 (SC) ; CIT v. Royal Western India Turf Club Ltd.,AIR 1954 SC 85 : [1954] SCR 289 ; The Commissionerof Income Tax v. Common Effluent Treatment Plant,(Thane Belapur) Association, (2010) 328 ITR 362(Bom) – referred to.

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Styles v. New York Life Insurance Company, (1889) 2T.C. 460 – referred to.

2. The notification dated 09.08.2001 is applicable only toco-operative housing societies and has no application to apremises society which consists of non-residential premises.[Para 24] [227-G]

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The New India Co-operative Housing Society v. TheState of Maharashtra, 2013 (2) MHLJ 666 –distinguished.

E

Mittal Court Premises Co-operative Society Ltd. v.Income Tax Officer (2010) 320 ITR 414 (Bom) –referred to.

H

218SUPREME COURT REPORTS[2018] 3 S.C.R.

B

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2706of 2018.

From the Judgment and Order dated 11.01.2010 of the High CourtCof Judicature at Bombay in ITA No.680 of 2009

WITH

Civil Appeal Nos.3271, 3272 and 3827 of 2012, Civil AppealNos.1180 of 2015, Civil Appeal Nos.2997 and 8741 of 2017, Civil AppealDNos. 2708, 2707, 2713, 2710, 2709, 2711, 2712, 2716, 2714, 2715, 2717,2728, 2718, 2720, 2721, 2719, 2722, 2724, 2726, 2723, 2725, 2727, 2729,2730, 2731, 2732, 2733, 2734, 2735, 2736, 2740, 2739, 2737, 2738, 2741,2742, 2743, 2766-2767, 2747, 2744, 2768-2769, 2771-2772, 2770, 2746,2745 and 2765 of 2018.

EK. Radhakrishnan, Aman Sinha, Yashank Adhyaru, Aman Sinha,Ajay Vohra, Sr. Advs, Rupesh Kumar, Sarad Kumar Singhania, DeepakPrakash, Pravesh Thakur, Ms. Anil Katiyar, Saswat Pattanaik, Ms. KavitaJha, Shiv Kumar Suri, B.V. Balaram Das, Farookh Irani, Subrat Birla,S.C. Birla, Sahil Kapoor, Sumit Lalchandani, Anil K. Chopra, SanatKapoor, Ms. Ananya Kapoor, Ms. Soumya Singh, Kslaya Parashar,FKamal Mohan Gupta, S. Basudevan, Saurav Sood, Ankur Saigal,Ms. Aastha Mehta, Mrs. Shally Bhasin, Nikhil Nayyar, N. Sai Vinod,Dhananjay Baijal, Ms. Smriti Shah, Divyanshu Rai, Salil Kapoor,Kishlay Parashar, Rashmikumar Manilal Vithlani, Aditya Panda,Dr. Shashwat Bajpai, Sharad Agarwal, V.N. Raghupathy, Parikshit P.GAngadi, Md. Apzal Ansari, Mrs. V.D. Khanna, Anil K. Chopra, ImranBurney, Arvind Kumar, Pratap Venugopal, Ms. Kanika Kalaiyarasan,M/s K J John and Co., Siddhartha Dave, Ms. Jentiben AO, SenthilJagadeesan, Nandini Gore, Mandeep Kalra, M/s Karanjawala & Co.,Siddhartha Chowdhury, Sanjeeb Panigarhi, S. Mahrotra, Advs for theappearing parties.H

The Judgment of the Court was delivered by NAVIN SINHA, J. 1. Delay condoned. Leave granted in all theSpecial Leave Petitions.

2. A common question of law arises for consideration in this batchof appeals, whether certain receipts by co-operative societies, from itsmembers i.e. non-occupancy charges, transfer charges, common amenityfund charges and certain other charges, are exempt from income taxbased on the doctrine of mutuality. The challenge is based on the premisethat such receipts are in the nature of business income, generating profitsand surplus, having an element of commerciality and therefore exigibleto tax. The assessee in Civil Appeal No.1180 of 2015 assails the findingthat such receipts, to the extent they were beyond the limits specified inthe Government notification dated 09.08.2001 issued under Section 79-A of the Maharashtra Co-operative Societies Act, 1960 (hereinafterreferred to as ‘the Act’) was exigible to tax falling beyond the mutualitydoctrine.

3. The primary facts, for better appreciation shall be noticed fromSLP (C) No.30194 of 2010. The assessing officer held that receipt ofnon-occupancy charges by the society from its members, to the extentthat it was beyond 10% of the service charges/maintenance chargespermissible under the notification dated 09.08.2001, stands excluded fromthe principle of mutuality and was taxable. The order was upheld by theCommissioner of Income Tax (Appeals). The Income Tax AppellateTribunal held that the notification dated 09.08.2001 was applicable toco-operative housing societies only and did not apply to a premises society.It further held that the transfer fee paid by the transferee member wasexigible to tax as the transferee did not have the status of a member atthe time of such payment and, therefore, the principles of mutuality didnot apply. The High Court set aside the finding that payment by thetransferee member was taxable while upholding taxability of the receiptbeyond that specified in the government notification.

4. Shri K.R. Radhakrishnan, learned senior counsel appearing onbehalf of the Revenue in all the appeals, submitted that the receiptswere exigible to tax no sooner that mutuality came to an end and thereceipts had an element of profit, also generating a surplus, renderingcommerciality to the nature of the activity. The benefit of a commonidentity between the contributors and the participants could not alone be A

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Athe final test. The Tribunal had correctly held that the transferee notbeing a member at the time of payment, the doctrine of mutuality had noapplication to such receipts. The principle of mutuality could not be invokedto prevent taxability of high value receipts by a society selling propertiesand then inducting such purchasers as members. The validity of thenotification dated 09.08.2001 having been upheld by the Bombay HighBCourt in The New India Co-operative Housing Society vs. The Stateof Maharashtra, 2013 (2) MHLJ 666, any receipt by the society beyondthat permissible in the law under the notification, was not only illegal, butalso amounted to rendering of services for profit attracting an elementof commerciality and thus was taxable. It stands to reason that if theCsociety levied maintenance charge upon a resident member at the rateof Rs.1.35 per sq.ft./p.m. and charged the much higher rate of Rs.7/-per sq.ft./p.m. as non-occupancy charges from others, the society wasacting commercially to earn profit. Reliance was placed onCommissioner of Income Tax, Madras vs. Kumbakonam MutualBenefit Fund Ltd., AIR 1965 SC 96 = (1964) 8 SCR 204, ChelmsfordDClub vs. Commissioner of Income Tax, (2000) 3 SCC 214.

5. Sri Radhakrishnan, sought to invoke Article 43B of theConstitution of India mandating professional management of co-operativesocieties, to justify taxability of receipts beyond that permissible underthe government notification. Reliance was further placed on Article 243ZIEto submit that economic participation had to be restricted to membersand had no application to a transferee who was not a member, renderingreceipt from them sans mutuality taxable.

6. The submission on behalf of the respondents shall be consideredcumulatively for convenience except to the extent necessary. RelyingFon Mittal Court Premises Co-operative Society Ltd. vs. Income TaxOfficer, (2010) 320 ITR 414 (Bom), it was submitted that the notificationdated 09.08.2001 was restricted in its application to housing co-operativesocieties only and had no application to a premises Society. Any receiptby the latter beyond the same was thus not exigible to tax on that ground.G

7. The receipt by a housing co-operative society of an amountbeyond that mentioned in the notification dated 09.08.2001, if it wascontrary to the law, would be actionable at the instance of the personrequired to pay such charges as was the case in The New India Co-operative Housing Society (supra). Such receipts will not be exigibleHto tax so long as the doctrine of mutuality stood satisfied by commonality of identity between the contributors and the participants, and thecontribution by the members was utilised for the common benefit of allthe members.

8. The receipt of transfer fee before induction to membershipunder some of the bye-laws shall not be liable to tax as the money wasreturned in the event that the person was not admitted to membership.The appropriation by the society took place only after admission tomembership. Once a person was admitted to membership, the membersforming a class, and the identity of the individual member being irrelevant,the principle of mutuality was automatically attracted. The receiptessentially was from a member and the fact that for convenience, partof it may have been paid by the transferee, was irrelevant as ultimatelythe amount was utilised for the mutual benefit of the members includingthe fresh inductee member.

9. Likewise, non-occupancy charges were levied for the purposeof general maintenance of the premises of the Society and provision ofother facilities and general amenities to the members. The fact thatsuch members who were not in self occupation may have had to pay ata higher rate was irrelevant so long as the receipts were utilised for thebenefit of the members as a class. It is not the case of the Revenuethat such receipts had been utilised for any purpose other than thecommon benefit of the members. Even if any amount was left over assurplus at the end of the financial year after meeting maintenance andother common charges, that would constitute surplus fund of the societyto be used for the common benefit of members and to meet heavy repairsand other contingencies and will not partake the character of profit orcommerciality so as to be exigible to tax.

10. Relying on Commissioner of Income Tax-21 vs. Jai HindCo-operative House Construction Society, (2012) 349 ITR 541 (Bom),it was contended that premium receipts by a housing society for allowinga member to construct using extra FSI was also not taxable on principlesof mutuality as the receipts were utilised by the society for maintenanceand infrastructure including to defray the extra burden on account of theadditional FSI constructed.

11. Fresh construction by a society itself, utilising extra FSIavailable, with grant of occupancy rights only to a member who mayhave had to pay more as membership fees than an existing member, will A

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Alikewise not detract from the principle of mutuality as the contributionwas ultimately to be used for the maintenance, repairs and facilities tomembers in the society including the additional construction. There couldbe no bifurcation between the receipts and costs to deny exemption tothe extent paid by the new members to qualify the same as non-mutual.Crucially, the admission to membership preceded the payment andBallotment of premises was done by draw of lottery.

12. It was next submitted that every receipt could not ipso factobe classified as income, relying on Commissioner of Income Tax,Mumbai vs. D.P. Sandhu Bros. Chembur (P) Ltd., (2005) 273 ITR 1(SC). Referring to CIT vs. Royal Western India Turf Club Ltd., AIRC1954 SC 85, it was submitted that so long as the three tests to determinemutuality and commonality of interests were met, there could not beexigiblity to tax under the general understanding of the doctrine ofmutuality that a person could not make aprofit from himself. Reliancewas also placed on Commissioner of Income Tax, Bihar vs. M/s.DBankipur Club Ltd., (1997) 226 ITR 97 (SC ) = (1997) 5 SCC 394and Bangalore Club vs. Commissioner of Income Tax and Another,(2013) 350 ITR 509 (SC)= (2013) 5 SCC 509.

13. We have considered the submissions on behalf of the parties.

13. We have considered the submissions on behalf of the parties.

14. The doctrine of mutuality, based on common law principles, isEpremised on the theory that a person cannot make a profit from himself.An amount received from oneself, therefore, cannot be regarded asincome and taxable. Section 2(24) of the Income Tax Act defines taxableincome. The income of a co-operative society from business is taxableunder Section 2(24)(vii) and will stand excluded from the principle ofFmutuality. The essence of the principle of mutuality lies in thecommonality of the contributors and the participants who are also thebeneficiaries. The contributors to the common fund must be entitled toparticipate in the surplus and the participators in the surplus arecontributors to the common fund. The law envisages a complete identitybetween the contributors and the participants in this sense. The principleGpostulates that what is returned is contributed by a member. Any surplusin the common fund shall therefore not constitute income but will only bean increase in the common fund meant to meet sudden eventualities. Acommon feature of mutual organizations in general can be stated to bethat the participants usually do not have property rights to their share inHthe common fund, nor can they sell their share. Cessation from membership would result in the loss of right to participate without receivinga financial benefit from the cessation of the membership.

15. The doctrine of mutuality based on common law is predicatedon the principles enunciated in Styles vs. New York Life InsuranceCompany, (1889) 2 T.C. 460, by Lord Watson in the House of Lords inthe following words:

“When a number of individuals agree to contribute funds for acommon purpose, such as the payment of annuities or of capitalsums, to some or all of them, on the occurrence of events certainor uncertain, and stipulate that their contributions, so far as notrequired for that purpose, shall be repaid to them, I cannot conceivewhy they should b regarded as traders, or why contributionsreturned to them should be regarded as profits.”

16. In Bankipur Club Ltd. (supra),considering the surplus ofreceipts over expenditure generated from the facilities extended by aclub to its members and its exemption from tax on principles of mutuality,it was observed :- “20……..In all these cases, the appellate tribunal as also the HighCourt have found that the amounts received by the clubs werefor supply of drinks, refreshments or other goods as also the lettingout of building for rent or the amounts received by way of admissionfees, periodical subscription etc. from the members of the clubswere only for/towards charges for the privileges, conveniencesand amenities provided to the members, which they were entitledto as per the rules and regulations of the respective clubs. It hasalso been found that different clubs realised various sums on theabove counts only to afford to their members the usual privileges,advantages, conveniences and accommodation. In other words,the services offered on the above counts were not done with anyprofit motive and were not tainted with commerciality. The facilitieswere offered only as a matter of convenience for the use of themembers (and their friends, if any, availing of the facilitiesoccasionally).

21. In the light of the above findings, it necessarily follows thatthe receipts for the various facilities extended by the clubs to theirmembers, as stated hereinabove as part of the usual privileges,advantages and conveniences, attached to the membership of the A

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club, cannot be said to be “a trading activity”. The surplus —excess of receipts over the expenditure as a result of mutualarrangement, cannot be said to be “income” for the purpose ofthe Act.”

17. In Bangalore Club(supra),after referring to Styles, the doctrineBof mutuality was explained further as follows :-

“8………..The principle relates to the notion that a person cannotmake a profit from himself. An amount received from oneself isnot regarded as income and is therefore not subject to tax; onlythe income which comes within the definition of Section 2(24) ofCthe Act is subject to tax [income from business involving thedoctrine of mutuality is denied exemption only in special casescovered under clause (vii) of Section 2(24) of the Act]. Theconcept of mutuality has been extended to defined groups of peoplewho contribute to a common fund, controlled by the group, for acommon benefit. Any amount surplus to that needed to pursueDthe common purpose is said to be simply an increase of the commonfund and as such neither considered income nor taxable……..Acommon feature of mutual organisations in general and of licensedclubs in particular, is that participants usually do not have propertyrights to their share in the common fund, nor can they sell theirEshare. And when they cease to be members, they lose their rightto participate without receiving a financial benefit from thesurrender of their membership……”

18. In The Commissioner of Income Tax vs. Common EffluentTreatment Plant, (Thane Belapur) Association, (2010) 328 ITR 362F(Bom), the assessee, an incorporated association under Section 25 ofthe Companies Act, 1956 comprising of industries operating in the Thane-Belapur region, was set up with a view to provide a centralised treatmentfacility for industrial effluents in view of the inability of each industrialunit to set up a separate effluent treatment facility. Chandrachud, J. (ashe then was), speaking for the Division Bench, applying the principles ofGmutuality to the surplus so generated not being exigible to tax, held :- “10. ….The income of the assessee is contributed by its members.The assessee has been formed specifically with the object ofproviding a common effluent facility to its members. The incomeis not generated out of dealings with any third party. The entire contribution originates in its members and is expended only infurtherance of the object of the Association for the benefit of themembers. On these facts, both the Commissioner (Appeals) andthe Tribunal were justified in coming to the conclusion that thesurplus so generated falls within the purview of the doctrine ofmutuality and was not exigible to tax….”

19. The proceedings in the present appeals relate to differentassessment years based on information gathered by the Assessing Officerpursuant to notice under Section 133(6) of the Income Tax Act. Transfercharges are payable by the outgoing member. If for convenience, partof it is paid by the transferee, it would not partake the nature of profit orcommerciality as the amount is appropriated only after the transferee isinducted as a member. In the event of non-admission, the amount isreturned. The moment the transferee is inducted as a member theprinciples of mutuality apply. Likewise, non-occupancy charges are leviedby the society and is payable by a member who does not himself occupythe premises but lets it out to a third person. The charges are againutilised only for the common benefit of facilities and amenities to themembers. Contribution to the common amenity fund taken from amember disposing property is similarly utilised for meeting sudden andregular heavy repairs to ensure continuous and proper hazard freemaintenance of the properties of the society which ultimately enures tothe enjoyment, benefit and safety of the members. These charges arelevied on the basis of resolutions passed by the society and in consonancewith its bye-laws. The receipts in the present cases have indisputablybeen used for mutual benefit towards maintenance of the premises, repairs,infrastructure and provision of common amenities.

20. Any difference in the contributions payable by old membersand fresh inductees cannot fall foul of the law as sufficient classificationexists. Membership forming a class, the identity of the individual membernot being relevant, induction into membership automatically attracts thedoctrine of mutuality. If a Society has surplus FSI available, it is entitledto utilise the same by making fresh construction in accordance with law.Naturally such additional construction would entail extra charges towardsmaintenance, infrastructure, common facilities and amenities. If thesociety first inducts new members who are required to contribute to thecommon fund for availing common facilities, and then grants onlyoccupancy rights to them by draw of lots, the ownership remaining with A

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Athe society, the receipts cannot be bifurcated into two segments of receiptand costs, so as to hold the former to be outside the purview of mutualityclassifying it as income of the society with commerciality.

21. Section 79A of the Maharashtra Co-operative Societies Actreads as follows:B“

“79A. Government’s power to give directions in the publicinterest, etc.- (1) If the State Government, on receipt of a reportfrom the Registrar or otherwise, is satisfied that in the public interestor for the purposes of securing proper implementation of co-operative production and other development programmes approvedCor undertaken by Government, or to secure the proper managementof the business of the Society generally, or for preventing theaffairs of the Society being conducted in a manner detrimental tothe interests of the members or of the depositors or the creditorsthereof, it is necessary to issue directions to any class of societiesgenerally or to any Society or societies in particular, the StateDGovernment may issue directions to them from time to time, andall societies or the societies concerned, as the case may be, shallbe bound to comply with such directions.

(2) The State Government may modify or cancel any directionsissued under subsection (1), and in modifying or cancelling suchEdirections may impose such conditions as it may deem fit.

(3) Where the Registrar is satisfied that any person was responsiblefor complying with any directions or modified directions issued toa Society under sub-sections (1) and (2) and he has failed withoutany good reason or justification, to comply with the directions, theFRegistrar may by order—

(a) if the person is a member of the committee of the Society,remove the member from the Committee and appoint any otherperson as member of the committee for the remainder of theterm of his office and declare him to be disqualified to be suchGmember for a period of six years from the date of the order:

(b) if the person is an employee of the Society, direct thecommittee to remove such person from employment of theSociety forthwith, and if any member or members of thecommittee, without any good reason or justification, fail to H

comply with this order, remove the members, appoint otherpersons as members and declare them disqualified as providedin clause (a) above:

Provided that, before making any order under this sub-section,the Registrar shall give a reasonable opportunity of being heard to theperson or persons concerned and consult the federal Society is affiliated.

Any order made by the Registrar under this section shall be final.”

22. In The New India Co-operative Housing Society (supra),the challenge by the aggrieved was to the transfer fee levied by thesociety in excess of that specified in the notification, which is a completelydifferent cause of action having no relevance to the present controversy.It is not the case of the Revenue that such receipts have not been utilisedfor the common benefit of those who have contributed to the funds.

23. The notification dated 09.08.2001 in the relevant extract readsas follows:-

ORDER

In the exercise of the powers conferred upon the State Governmentunder Section 79-A of the Maharashtra Co-operative SocietiesAct, 1960 following orders are hereby issued in the larger interestsof the people in the State.

1) Xxxxxx

2) The rate of premium to be charged for the transfer Flat/Premises as well as the rights and share in the share capital/property of the Co-operative Housing Society by a memberin favour of another, should be determined at the GeneralMeeting of the Society.

24. We do not find any reason to take a view different from thattaken by the High Court, that the notification dated 09.08.2001 isapplicable only to co-operative housing societies and has no applicationto a premises society which consists of non-residential premises.

25. Kumbakonam (supra), is distinguishable on its own facts.Thedoctrine of mutuality was held to be inapplicable because the memberswho had not contributed to surplus as customers were neverthelessentitled to participate and receive part of the surplus. In Chelmsford A

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AClub (supra), it was held that there was no profit motive or sharing ofprofits as such amongst the members. The surplus, if any, from thebusiness was not shared by the members but was used for providingbetter facilities to the members. There was a clear identity between thecontributors and the participators to the fund and the recipients thereof.

B26. In the result, all appeals preferred by the Revenue aredismissed. Civil Appeal No.1180 of 2015 preferred by the assessee societyis allowed.

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Kalpana K. Tripathy

Appeals disposed of.

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